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(gentle music)

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- Dave, M&A has been an unlock and a tool

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for Moody's in its journey of becoming

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an integrated risk assessment provider.

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How do you think about M&A?

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- I have a counterintuitive answer,

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particularly for an M&A guy.

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So, believe it or not,
in my perfect world,

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all growth would be organic.

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Why?

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Because the things that you build yourself

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with the ingredients in the cupboard

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have the highest return profile.

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That's a fact.

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Sometimes it's hard to do it yourself.

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Senior management have many objectives

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and demands and things
to do on their plate.

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And something you thought
might get done in say,

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I don't know, six months
and cost a hundred dollars,

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might get lost in the shuffle.

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So maybe it's done in 18
months and it costs you $200,

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but some other competitor got there first

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and they built the capability,

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recruited the subject matter experts,

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the people, or whatever.

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So you gotta ask yourself
and be honest with yourself:

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is whatever we're talking about,

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is it a nice to have or
is it a need to have?

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If it's really important

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and there's a real revenue opportunity,

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a customer value proposition that's unmet

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where they need your help

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and you can buy something at scale

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and achieve an appropriate
risk-adjusted return

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on the capital and also
get great new colleagues

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in the bargain, then it's
probably better to buy than build.

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Here's the thing.

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An integration starts
during due diligence.

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You have got to start
planning for how people

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are going to work together
to combine the best

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of what you have and the
best of what they have.

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There can't be an attitude
of not invented here

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and where incumbency wins, right?

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That does not work.

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The people that you're working with

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on the diligence process,
if everything goes right,

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they're gonna be your colleagues
and potential new leaders.

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They're people, they're not assets.

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there has to be a good match,

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and people want to feel wanted
and they want to feel valued.

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(gentle music)